06 January 2021 
Andrea Marshall, Tax Specialist
Thanks to Ian Short from KPMG who has provided this analysis on the DAC6 changes. You may recall that Ian did a presentation on this issue for us in July and here is the Hallmark D slide as a reminder.
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I just wanted to update you on a change that was announced by HMRC, regarding the implementation of EUMDR/DAC6 in the UK. You may recall that, when I presented the session on this a few months ago, I had explained that the rules had already effectively been replicated into UK legislation, so we did not expect that Brexit would change anything. However, I suppose that it was foolish to think anything would be so straightforward where Brexit was involved!
HMRC have noted that the new EU/UK trade and cooperation agreement requires the parties to maintain tax disclosure requirements agreed at OECD level as at the end of transition. The OECD MDR only requires reporting of arrangements which are (in effect) replicated in the D1/D2 hallmarks of DAC6, which essentially deal with arrangements designed to avoid exchange of information provisions (I attach a copy of the relevant slide from my previous presentation).
The UK Government has therefore laid down Regulation 2020/1649, which deletes hallmarks A, B, C and E from the UK implementation of the DAC. The only reporting required to HMRC will therefore be of arrangements meeting hallmarks D1 and D2, and HMRC have now confirmed to us that this change is retrospective, back to June 2018, so that no reporting is now required in the UK for any arrangements (whenever implemented) unless they meet these hallmarks.
When I spoke on this subject previously, I noted that Hallmark D was, in our experience, unlikely to be relevant to most University transactions or arrangements, and we have certainly not identified anything that we have advised on in the last few years that would meet this hallmark, so it would appear that this has effectively removed the issue in the UK, at least for the moment. However, in the meantime, we have been promised that the UK Government will be repealing the existing legislation, and bringing forward new UK mandatory disclosure rules in due course. There are no clues yet as to what these may be, or when they will become effective, but we shall of course discuss any further developments with you as they arise.
Unfortunately, this is not to say that UK universities can completely forget about all the EU rules – nothing will currently need to be reported in the UK, unless Hallmark D is met (which is considered unlikely), but there will be circumstances that will still need to be considered, particularly if the university has a taxable presence in any EU member states, they enter into arrangements with EU residents or they receive advice from advisers in EU member states, as reporting obligations may arise in those countries. We can give this some further thought, if you think that would be helpful, and set out the key circumstances that will still need to be kept under review.
Hope this all makes sense, but let me know if you want to discuss anything.
